17 Corporate Crime Reporter 19(1), May 12, 2003

BUSH GOES TO CALIFORNIA TO SUPPORT CARLYLE GROUP DEFENSE COMPANY

United Defense is a major military contractor.

It is the maker of the Bradley Fighting Vehicle.

It is the maker of the Hercules Tank Recovery vehicle -- the vehicle that dragged down the statute of Saddam Hussein.

President Bush went to the Santa Clara production facility of United Defense last week to praise the company and its products.

"The technologies and products developed here at United Defense have made our military second to none," President Bush told a cheering crowd of United Defense executives and workers. "So I'm here to thank the folks who work for this fine company on behalf of the American people for your contribution to the security of your nation and for the peace of the world."

Of all of the nation's military contractors, why did the President choose to go to United Defense?

We don't know.

But United Defense is controlled by the Carlyle Group, a private investment firm with $15.8 billion under management.

And the President's father, George H.W. Bush, is a paid adviser to the Carlyle Group.

Last week, when asked about the President's trip to Santa Clara, promoting a Carlyle Group-controlled company, the White House denied any impropriety.

"The question is -- are Bradley Fighting Vehicles part of what the military does and should be supported?" said White House Press Secretary Ari Fleischer. "The answer is -- of course yes, regardless of who serves on Carlyle Group."

"But what if the President's father was the President of United Defense," Fleischer was asked. "Would that be unethical?"

"What if the President's father was on Social Security," Fleischer shot back, "and the President wanted to strengthen the Social Security system so that all Americans could have a strong retirement?"

This did not wash with Charles Lewis, executive director of the Center for Public Integrity.

"It would appear that Mr. Fleischer and this White House believe their administration is hermetically immune from conflicts of interest, that is, they simply could never happen with this President and his people," Lewis told Corporate Crime Reporter. "That is, of course, absurd and the height of hubris."

"The President has never explained how his father could work on behalf of a defense contractor during a remarkable boom time for the defense industry -- the first time in U.S. history a former president has been so employed," Lewis said. "Neither will Bush the father or Carlyle divulge the extent or lucrative details of the relationship. Not explaining means not answering questions, not deigning to dignify the possibility that an appearance of a conflict might exist. To many in the world, this is a scandal."

Financial journalist Dan Briody agrees with Lewis.

Briody has written a book on the Caryle Group -- The Iron Triangle: Inside the Secret World of the Carlyle Group (Wiley, 2003).

"There is a big difference between the president's father benefitting from a war, in which Americans are killed, and the president's father benefitting from Social Security reform," Briody said. "I think anyone with sense could see the distinction."

"Ari is very good at what he does," Briody added. "In this case his job is to dismiss and diffuse an obvious conflict of interest by using humor and logical fallacies." (See Interview, page 12)

More than two years ago, Judicial Watch, the public interest law firm that investigates government abuse and corruption, called on former President George H.W. Bush to resign from the Carlyle Group while his son is in office.

"This is simply inappropriate," said Judicial Watch chair Larry Klayman at the time. "Former President Bush should immediately resign from the Carlyle Group because it is an obvious conflict of interest. Any foreign government or foreign investor trying to curry favor with the current Bush Administration is sure to throw business to the Carlyle Group. And with the former President Bush promoting the firm's investments abroad, foreign nationals could understandably confuse the Carlyle Group's interests with the interests of the United States government."

Carlyle Group spokesman Christopher Ullman, reacted angrily to questions about a possible conflict of interest posed by George H.W. Bush's work for Carlyle.

Speaking to Terry Gross of National Public Radio last week Ullman said that "there once was a time when impropriety was the measure of impropriety."

"Now it's the hint of the hint of the hint of impropriety by someone like Dan Briody who has an agenda or someone like -- you know, some of these self-appointed do-gooder organizations like the Center on Public Integrity (sic) where the facts that they know are facts they read in the newspaper," Ullman said. "They don't call here asking for facts because they're not interested in the truth. They have an agenda. And it is wrong to impugn the integrity of a committed former public servant just because of the hint of the hint of the hint of impropriety."

Briody said that he tried to get Carlyle to answer his questions, but they refused.

"Carlyle has been poked and prodded and people have peered beneath the hood, and for 10 years people have made these types of accusations and for 10 years they have come up with nothing other than hot air about the hint of the hint of the hint of impropriety," Ullman said. "You know what? It's about time that people either put up or shut up regarding this issue, because people like George Bush, Frank Carlucci, James Baker have served their countries well -- they are wonderful public servants for decades. I mean, if you put it all together cumulatively it would be probably close to 40, 50, 60 years they've served this country, and they have stellar reputations. And you know, sadly none of them seems to be given in today's climate any benefit of the doubt, that in Briody's book he implies that the current and the former president would sell out their country to benefit Carlyle. That is offensive, unsubstantiated and the mark of an irresponsible journalist."